Chevron will now sell a whopping $6.5bn in oil sands as the company focuses its growth plans increasingly in other parts of the world.
Chevron has announced a deal involving its 20% stake in the Athabasca Oil Sands Project and a 70% interest in the Duvernay shale formation in Alberta.
The all-cash transaction, effective September 1, is set to close in the fourth quarter, pending regulatory approvals, per WorldOil.
This asset sale aligns with Chevron’s strategy to focus its growth in other regions, particularly the Permian Basin in the U.S. and the Tengiz field in Kazakhstan, where a $48.5 billion expansion project is nearing completion.
Additionally, Chevron is in the process of acquiring Hess Corp. for $53 billion, which would provide it with a stake in a significant offshore oil field in Guyana, a key exploration area.
Following the announcement, Chevron’s shares rose by as much as 1.3% prior to regular trading in New York.
This move is part of a broader trend among major oil producers divesting from Canadian oil sands operations.
Companies like BP, Shell, ConocoPhillips, Equinor, and Devon Energy have previously sold their stakes in Alberta’s oil sands to local firms, resulting in increased control of these resources by Canadian producers such as Canadian Natural Resources, Cenovus, and Suncor Energy.
Oil sands are known for their substantial environmental impact, as extracting crude from these areas typically involves mining or steam injection, making them among the highest carbon-emitting oil sources globally.
Canada’s oil sands have been in production for decades, but the industry is currently experiencing significant changes following the completion of the Trans Mountain pipeline expansion, which has opened Asian markets for Canadian crude.
Previously reliant on U.S. pipelines and refiners, the Canadian oil industry faced deeper discounts and vulnerabilities to price fluctuations.
Since the pipeline expansion, approximately 28 million barrels of crude have been shipped to Canada’s west coast, with nearly two-thirds directed to markets in China, India, South Korea, and Brunei.
The Duvernay shale formation, located in southwest Alberta, is a prolific source of condensate, light oil, and gas, and Chevron has been a major driller in this area.
Canadian Natural Resources expects that production from these assets will average around 60,000 barrels of oil per day (bopd) in 2025, along with approximately 179 million cubic feet per day (MMcfd) of natural gas and 30,000 bopd of liquids.
To finance the acquisition, Canadian Natural Resources has secured a $4 billion term loan from The Bank of Nova Scotia and the Royal Bank of Canada, and it has also announced a 7% increase in its quarterly dividend.
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